Key Takeaways
- Supreme Court hearing case on Trump's tariffs.
- Effects of Trump's consideration of 100% tariffs on foreign made movies.
- Election day tax measure results.
- Government shutdown continues; updates on the effort to reopen.
- Analysis of OBBBA and senior tax cuts.
- Foreign reporting: W-8BEN and W-9.
- National American Football Day!
Today: Supreme Court Hearing Case on Trump's Tariffs
Live Updates: Supreme Court Hearing Case Challenging Trump’s Tariff Authority - Ann Marimow, New York Times:
The Supreme Court is hearing a case on Wednesday with tremendous consequences for American businesses, consumers and presidential power.
The justices are considering the legality of President Trump’s use of emergency powers to impose tariffs on imports from more than 100 countries. He justified the tariffs as necessary to reduce the trade deficit and spur domestic manufacturing. But they were challenged by a dozen states as well as small businesses.
The justices are considering the legality of President Trump’s use of emergency powers to impose tariffs on imports from more than 100 countries. He justified the tariffs as necessary to reduce the trade deficit and spur domestic manufacturing. But they were challenged by a dozen states as well as small businesses.
Will the Supreme Court case on tariffs affect my pocketbook? - Justin Jouvenal, Washington Post:
The Trump administration says the president has the authority to announce tariffs under IEEPA, which has traditionally been used to impose sanctions in response to a threat from abroad.
Specifically, IEEPA allows the president to declare an emergency to “regulate importation” of foreign goods to “deal with any unusual and extraordinary threat” to “national security, foreign policy, or economy.”
...
The small businesses and states say Trump has overstepped his authority.
They point out IEEPA does not mention tariffs, and no president before Trump had ever used the law to levy import taxes in its 50-year history. What’s more, they argue trade deficits do not meet the definition of an emergency because they have existed for decades.
Specifically, IEEPA allows the president to declare an emergency to “regulate importation” of foreign goods to “deal with any unusual and extraordinary threat” to “national security, foreign policy, or economy.”
...
The small businesses and states say Trump has overstepped his authority.
They point out IEEPA does not mention tariffs, and no president before Trump had ever used the law to levy import taxes in its 50-year history. What’s more, they argue trade deficits do not meet the definition of an emergency because they have existed for decades.
Tariff case has big stakes for Congress - Laura Weiss and Brendan Pedersen, Punchbowl News:
The Trump administration could turn to other executive authorities aside from IEEPA.
But any pressure on Capitol Hill to address tariffs gets difficult quickly for Republicans. Many Republicans have quietly accepted tariff policies from Trump that they would normally oppose. Asking them to advance legislation that would empower the administration’s approach would be a bitter pill to swallow.
The unease over Trump’s trade moves has ticked up recently. There was last week’s Senate votes to overturn tariffs, a small public revolt this fall over House GOP leaders blocking tariff votes, and the backlash over increasing Argentinian beef imports.
But any pressure on Capitol Hill to address tariffs gets difficult quickly for Republicans. Many Republicans have quietly accepted tariff policies from Trump that they would normally oppose. Asking them to advance legislation that would empower the administration’s approach would be a bitter pill to swallow.
The unease over Trump’s trade moves has ticked up recently. There was last week’s Senate votes to overturn tariffs, a small public revolt this fall over House GOP leaders blocking tariff votes, and the backlash over increasing Argentinian beef imports.
Tariff Policy on Foreign Made Movies
Tariffs On Movies Would Face Very High Hurdles - Janet Holtzblatt, Robert McClelland, John Wong, Tax Policy Center:
Overall, tariff policies may cut into attendance if people reduce their entertainment spending because of higher prices in the economy. But, in addition, President Trump has warned that he is considering a 100 percent tariff on “any and all movies that are made outside the United States.”
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A related challenge is the phenomenon known as “Hollywood accounting”—when studios overstate a film’s costs to reduce the amounts paid to actors who take a cut in salary in exchange for a share of the net profits. If savvy distributors adopt similar strategies in their dealings with foreign film producers, a tariff on leases and licensing fees, even at 100 percent, might not stem the flow of foreign-made movies.
...
A related challenge is the phenomenon known as “Hollywood accounting”—when studios overstate a film’s costs to reduce the amounts paid to actors who take a cut in salary in exchange for a share of the net profits. If savvy distributors adopt similar strategies in their dealings with foreign film producers, a tariff on leases and licensing fees, even at 100 percent, might not stem the flow of foreign-made movies.
Voters Decided: Election Day Tax Results
AP Race Call: Colorado voters OK income tax increase to fund free meals for public school students - AP News:
Colorado voters approved a ballot measure on Tuesday that would raise state income taxes on households earning at least $300,000 annually to fund free meals for all public school students.
Wall Street Laments Mamdani’s Victory and Plots Its Next Move - Lauren Hirsch, Wall Street Journal:
Mr. Mamdani wants to raise the maximum corporate tax rate to 11.5 percent up from 7.25 percent and put in place a 2 percent tax on those who make more than a $1 million.
Texas Proposition 8 Election Results: Prohibit Tax on Estates - New York Times. "Prohibit the state from imposing estate taxes, as well as new taxes on estate transfers, inheritances and gifts."
Texans voted in favor of Proposition 8 on Wednesday.
Texas voters approve historic property tax cuts - Audrey Wong, Sebastian Garcia, and Dylan McKim - The Hill:
The Texas Tribune has called the elections on Propositions 11 and 13, which cut property taxes for homeowners, with an additional cut for disabled Texans and those over the age of 65.
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Propositions 11 and 13 lower property taxes by increasing the allowable property tax exemptions for homesteads.
Proposition 11 increases homestead property tax exemptions for elderly and disabled owners. Exemptions would bump from $10,000 to $60,000 of the market value of a homestead.
Proposition 13 is a more far-reaching exemption. It increases exemptions from school district property taxes from $100,000 to $140,000 of the market value of a homestead.
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Propositions 11 and 13 lower property taxes by increasing the allowable property tax exemptions for homesteads.
Proposition 11 increases homestead property tax exemptions for elderly and disabled owners. Exemptions would bump from $10,000 to $60,000 of the market value of a homestead.
Proposition 13 is a more far-reaching exemption. It increases exemptions from school district property taxes from $100,000 to $140,000 of the market value of a homestead.
Government Shutdown Reaches 36th Day
Group of Senate Democrats eye abandoning shutdown fight — but get pushback - Alexander Bolton, The Hill:
A senator familiar with the behind-the-scenes negotiations said centrist Democrats, including retiring Sens. Jeanne Shaheen (D-N.H.) and Gary Peters (D-Mich.), have the contours of a deal and are “whipping” more of their colleagues to sign on — but it’s not yet clear whether they’ll get enough additional votes to end the 36-day shutdown.
Senate sources say Sen. Maggie Hassan (D-N.H.) has also signaled she would likely support a deal to reopen the government.
Such a deal would include a plan to pass regular appropriations bills and a promised vote on extending expiring health insurance subsidies.
Senate sources say Sen. Maggie Hassan (D-N.H.) has also signaled she would likely support a deal to reopen the government.
Such a deal would include a plan to pass regular appropriations bills and a promised vote on extending expiring health insurance subsidies.
Shutdown Leaves Tax Pros Few Options To Find Clients Relief - Stephen Cooper, Law 360 Tax Authority ($):
The IRS has been beset by worsening delays in addressing taxpayers' cases, driven by widespread furloughs and a wave of retirements, and the ongoing government shutdown has compounded the issue by bringing federal district courts to a halt, leaving tax practitioners few options to seek relief for clients.
Even the Taxpayer Advocate Service, traditionally one of the last options available for seeking client assistance, has been of little help in resolving complex tax return issues, tax attorneys said, because the agency's workforce has been cut in half and largely sent home during the shutdown. In some cases, seeking help from the TAS can actually slow down the process, they said.
Even the Taxpayer Advocate Service, traditionally one of the last options available for seeking client assistance, has been of little help in resolving complex tax return issues, tax attorneys said, because the agency's workforce has been cut in half and largely sent home during the shutdown. In some cases, seeking help from the TAS can actually slow down the process, they said.
Related: Eide Bailly IRS Dispute Resolution & Collections.
Tax Policy; OBBBA and Senior Tax Cuts
The OBBBA Senior Deduction Is Poorly Targeted Tax Relief - Huaqun Li, Tax Foundation:
The distribution of after-tax income across different age groups indicates that seniors benefit the most from the OBBBA tax provisions. Among the individual income tax provisions, the extra senior deduction stands out as a major driver of the variation of the tax benefit across age groups. On average, we estimate each household with a qualifying senior will gain an extra 1.5 percentage point boost in after-tax income due to the extra senior deduction, roughly a $780 increase in their take-home pay.
Blogs & Bits
Nationwide Tax Forum Online launches with new continuing education content - IRS:
The Internal Revenue Service today announced the launch of the 2025 Nationwide Tax Forum Online, providing tax professionals access to seminars recorded at this year's IRS Nationwide Tax Forum.
The Nationwide Tax Forum Online provides information to tax professionals on current tax law, IRS procedures and essential topics for the upcoming tax season. Each seminar features a 50-minute interactive video presentation synchronized with PowerPoint slides, downloadable resources and full transcripts.
The Nationwide Tax Forum Online provides information to tax professionals on current tax law, IRS procedures and essential topics for the upcoming tax season. Each seminar features a 50-minute interactive video presentation synchronized with PowerPoint slides, downloadable resources and full transcripts.
Valuation Misstatement and Highest and Best Use: Tax Court Again Rejects Easement Valuation Based on Discounted Cash Flow Analysis for a Nonexistent Business - Ed Zollars, Current Federal Tax Developments:
In summary, the Court determined that the taxpayer’s claimed deduction, which hinged on an unrealistic assumption of highest and best use as an active granite mine, had "no basis in reality". This discrepancy resulted in a gross valuation misstatement, leading to the application of the 40% penalty.
Analogy: Determining the value of raw land with potential minerals is like appraising an unfinished novel—while the author (taxpayer) believes the book holds immense value based on its projected sales as a global bestseller (active quarry use), a careful editor (the Court) must value the work based on its current market reality, acknowledging that an unproven manuscript (potential mining requiring further study) sells for much less than a commercially proven success. The difference between the dream valuation and the market reality triggered the penalty.
Analogy: Determining the value of raw land with potential minerals is like appraising an unfinished novel—while the author (taxpayer) believes the book holds immense value based on its projected sales as a global bestseller (active quarry use), a careful editor (the Court) must value the work based on its current market reality, acknowledging that an unproven manuscript (potential mining requiring further study) sells for much less than a commercially proven success. The difference between the dream valuation and the market reality triggered the penalty.
Forms W-8BEN And W-9: Which To Use, When, And Why Many Get It Wrong - Virginia La Torre Jeker, Forbes:
A major area of confusion arises for certain individuals living abroad, typically those who hold a U.S. green card or are dual nationals. Many such individuals mistakenly treat themselves as “foreign persons” and submit Form W-8BEN. That is incorrect.
Under U.S. tax law, an individual is considered a U.S. resident alien if they pass either the “green-card test” or the “substantial presence test.” Green-card holders automatically meet the green-card test (unless the status has been formally terminated). Thus, a green-card holder is a U.S. person for tax purposes and must provide a Form W-9, not a W-8BEN, even if the green card has expired but formal termination of the status has not been undertaken.
Under U.S. tax law, an individual is considered a U.S. resident alien if they pass either the “green-card test” or the “substantial presence test.” Green-card holders automatically meet the green-card test (unless the status has been formally terminated). Thus, a green-card holder is a U.S. person for tax purposes and must provide a Form W-9, not a W-8BEN, even if the green card has expired but formal termination of the status has not been undertaken.
Related: Eide Bailly International Tax Services.
5 tax moves to make this November, Kay Bell on Substack:
Bunch deductions to take advantage of itemizing. The Tax Cuts and Jobs Act (TCJA) of 2017 capped the amount of state and local taxes (SALT) at $10,000 that could be claimed as an itemized federal expense. The SALT taxes include state income taxes, property taxes, and sales taxes.
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When your itemized and standard deduction amounts are close, this tax strategy known as bunching, generally works best when you can shift as many allowable Schedule A claims into one year, 2025 in this case, so you can itemize, and then claim the standard deduction for the next one.
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When your itemized and standard deduction amounts are close, this tax strategy known as bunching, generally works best when you can shift as many allowable Schedule A claims into one year, 2025 in this case, so you can itemize, and then claim the standard deduction for the next one.
Career Change Amidst Shutdown
Off the Beaten Tax: Furloughed IRS Lawyer Opens Hot Dog Stand - Colleen Lamay, Tax Notes ($):
IRS attorney Isaac Stein still wears a suit and tie to work every day in Washington, but instead of taking care of official business, the furloughed attorney slings hot dogs at a neighborhood stand he named “Shysters Dogs,” with a sign describing it as “the only honest rip-off in D.C.”
“I really look forward to getting back to my day job,” Stein told WUSA-TV. “But in the interim, I will keep myself engaged with my project here.”
“I really look forward to getting back to my day job,” Stein told WUSA-TV. “But in the interim, I will keep myself engaged with my project here.”
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